From Lab to IPO: How Hard Is the 'Bell-Ringing Journey' for Scientist-Entrepreneurs?

Going public seems to be becoming increasingly “easy” in the healthcare sector.

According toVCBeat Orange BureauStatistics show that in 2020, ChinaA total of 71 companies in the healthcare sector went public, representing a 73% year-on-year increase;In 2021, this IPO enthusiasm continued in China.A total of 98 companies in the healthcare sector went public throughout the year, representing a 38% year-on-year increase.

Behind this surge in interest, VCBeat’s Orange Fruit Bureau has identified three trends: first, listed companies are predominantly in the biotechnology and medical device sectors, accounting forOver 80%; second, the time to market has been significantly shortened. Taking 2020 data as an example, among the 71 listed companies,There are 27 companies that have been established for less than 10 years.

Third, scientists are beginning to emerge in IPOs.According to statistics, among the 169 listed companies in the past two years, more than 35% of their founders have a scientific background.This includes the founder of BeiGene, which rang the bell for its listing on the Hong Kong Stock Exchange in August 2018.Dr. Wang Xiaodong, founder of InnoCare Pharma, which rang the bell for its listing on the Hong Kong Stock Exchange in March 2020Dr. Yigong Shi, founder of Zebra Medical, which was listed on the Main Board of the Hong Kong Stock Exchange in July 2021Dr. Zhao Zhong...

This is no easy feat, especially for scientists. Although they have achieved technical excellence, there remains a long road ahead in bridging the gap between technological application and market commercialization. Therefore, on the arduous path of entrepreneurship, only a select few manage to succeed, and those who ultimately lead their companies to an initial public offering (IPO) are exceedingly rare.

So, what exactly have these pioneering scientist-entrepreneurs done right? To answer this question,VCBeat Orange BureauThe answer can be found in the entrepreneurial journeys of three scientist-founders: Dr. Shi Yigong, founder of InnoCare Pharma; Dr. Zhao Zhong, founder of Joinn Medical; and Dr. Wang Xiaodong, founder of BeiGene.

Why Do Scientists Start Businesses?

To address this issue,VBInsightThroughout our extensive research, we have heard a wide variety of responses. Some are inspiring, such as the desire to leverage years of research and technology to benefit more patients; others are admirable, reflecting a strong sense of identification with and dedication to entrepreneurship; and still others are amusing, such as being pushed into it by academic and research institutions, by investors, or even by parents.

Regardless of the answer provided, scientists who embark on the path of entrepreneurship inevitably have their reasons.

In 1974, Wang Xiaodong’s mother passed away from cancer. Witnessing her suffering on the hospital bed, a profound sense of helplessness inspired the young Wang Xiaodong to pursue a career in medicine.

In 1980, Wang Xiaodong was admitted to the Department of Biology at Beijing Normal University; in 1985, he was directly promoted to graduate studies in biology at the same university. A year later, he went to the University of Texas Southwestern Medical Center in the United States to pursue his Ph.D. under the supervision of Richard A. Padgett. In 1991, he conducted postdoctoral research under the mentorship of two Nobel laureates, Professors Joseph Goldstein and Michael Brown.

Subsequently, Wang Xiaodong chose to return to China and established in 1995Laboratory for Apoptosis Research, embarked on the path of independent scientific research. During this period, many significant events occurred in Wang Xiaodong’s life: he was elected as a member of the U.S. National Academy of Sciences and foundedNational Institute of Biological Sciences, Beijing,EncounterFuture Partner Oule Qiang......Each step along the way seemed to guide Wang Xiaodong toward entrepreneurship.

In December 2010, after numerous lengthy discussions and repeated internal deliberations, Wang Xiaodong and Ole Strong, together with Merck KGaA of Germany and other investment institutions, jointly raised funds.$32 million,Founded in Changping, BeijingBeiGene, committed to becoming China’s “Genentech.”

Speaking of Shi Yigong, he is indeed a legendary figure adorned with many labels. In 1984, Shi Yigong was admitted directly to Tsinghua University without taking the entrance exam, having secured first place in the Henan Division of the National High School Mathematics League. After graduating from university, Shi Yigong did not initially intend to pursue a career in scientific research. In a speech, he frankly stated, “Wholeheartedly Eager to Venture into Business”。

However, contrary to his original intentions, Shi Yigong, who had been determined to pursue a career in business, embarked on the path of studying abroad in the United States and obtained his Ph.D. from Johns Hopkins University in 1995. From 1998 to 2008, he served at Princeton University in the United States. In 2008, Shi Yigong announced that he was forgoing $10 million in research funding and resigning from his tenured professorship at Princeton University to return to China.

After returning to China, Shi Yigong joined Tsinghua University and was appointed Vice President of Tsinghua University in 2015. In the same year, Shi Yigong, together with Cui Jisong and others, co-founded a biotechnology company.InnoCare Pharma, finally fulfilling the promise made in youth to engage in business as he approached his fifties.

Before starting his own business, Zhao Zhong worked atJohnson & JohnsonHaving worked for a full nine years, Zhao Zhong participated in the development of the world’s first coronary drug-eluting stent during his tenure.Cypherdevelopment, securing $1 billion in sales for the company in the first quarter.

After achieving widespread success across the United States, Cypher quickly entered the Chinese market. At that time, the unit price of the product was RMB 40,000, a prohibitively high cost that posed significant financial challenges for most domestic patients. This situation deeply affected Zhao Zhong, prompting him to conceive the idea of “"Domestically produced high-end medical devices with development quality comparable to top-tier imported products, yet priced at only half the cost."idea.

In 2012, Zhao Zhong left Johnson & Johnson and established Zhejiang GuiChuang Medical Device Co., Ltd. (“Zhejiang GuiChuang”), the predecessor of GuiChuang TongQiao, in November of that year. The company was named “GuiChuang,” signifying “returning to China to start a business.”

It is not easy to set out, and it is even harder to keep moving forward. Shi Yigong has publicly stated:The Last Straw That Broke the Camel’s Back: Encouraging Scientists to Launch Startups.

This statement is correct, and we can verify it through two core metrics:First, low conversion rate, although China has ranked first globally in the number of patents for three consecutive years since 2019, the keyConversion rate is only 5%, with a significant gap compared to European and American countries.

Second, the high failure rate of startups., according to data from Bastille, a world-leading technology transfer company in the United States,The failure rate of startups founded by professors at U.S. universities is as high as 96–97%.Even in the United States, where commerce is highly developed and there is a robust system for translating innovations into practical applications, this is the case; China, still in its early stages, will only have higher figures in this regard.

The underwhelming data is inevitably attributable to specific reasons, as the challenges scientists encounter on their entrepreneurial journey are both concrete and thorny.

The first point is the transcendence and recognition of identity.

Although scientists and entrepreneurs share some common ground, their mindsets differ fundamentally. Scientists can be rational, even idealistic, whereas entrepreneurs must ensure practical implementation.

Taking technological R&D as an example, scientists can engage in the development of cutting-edge technologies independent of market forces, focusing on overcoming technical challenges inherent to the technology itself. In contrast, entrepreneurs must conduct R&D with the market as their benchmark, because even if a technology is perfected to the utmost degree, it is difficult to sustain a business to long-term success without market demand.

The second point is the linkage and application of market resources.

Scientific research can, to some extent, operate independently of the market, but enterprises are invariably tied to it. Consequently, how to effectively “engage with” the market has become a major challenge for scientist-founders.

This involves two aspects, the first being connectivity—specifically, how scientists can access market resources. Taking Zhao Zhong as an example, he endured significant hardships during the first two years after founding GuiChuang. This was primarily because he had just returned to China and lacked both resources and professional networks, causing the company’s progress to be very slow.

The second level is application, namely how scientists can precisely screen market resources suitable for themselves. Taking Wang Xiaodong as an example, in the first year of BeiGene’s establishment, Wang Xiaodong encountered difficulties because the startup capital of more than 30 million US dollars was soon depleted due to high research and development costs. At its lowest point, the company had only a little over 10,000 US dollars in cash left on its accounts. In order to keep the company “alive,” Wang Xiaodong spent half a year visiting the entire investment community. Ultimately, it was Merck KGaA from Germany that invested 20 million US dollars, allowing the company to recover.

The third point is the establishment and management of the company's team.

A successful entrepreneur told VCBeat’s Orange Bureau that when scientists found companies, their most critical task is to continuously identify the most outstanding and specialized professionals in the industry to handle specialized tasks, foster effective collaboration among these talented individuals, and ultimately build a strong and stable team.

This is no easy task, as scientists must address several core challenges: First, how to find the right people. While scientists typically have no trouble connecting with technical talent, they often struggle to reach candidates for foundational roles such as finance, human resources, and sales. Second, how to identify suitable candidates who align with the company’s development trajectory. Third, how to foster effective team collaboration to maximize the team’s potential value.

This is hardly surprising. Shi Yigong has consistently positioned himself in opposition to scientists becoming entrepreneurs. He stated, “Every profession has its own specialization; I am only well-versed in my basic research and have some understanding of education. Asking me to engage in operational management, run a company, or serve as CEO would be misapplying my talents and intellect.”

Entrepreneurship for scientists is, in effect, a process of “survival of the fittest”; only those who consistently make the right choices can persevere to the end on this thorny path.

So, what exactly did they do right?

First is “self-revolution.”

Scientist-entrepreneurs who have achieved success all share one common trait, namelyChoose Acceptance, which primarily encompasses two layers of meaning,First, embrace the commercialization of technology; second, embrace the diversity of the team.

Let’s begin with the commercialization of technology. Many scientists harbor a resistance to commercialization, viewing it as merely profit-driven and thus a “disguised insult” to their technological achievements. However, from an economic perspective, the fundamental purpose of any enterprise upon its establishment is to pursue profits, as profitability is essential for the survival and sustainability of the business.

Take Wang Xiaodong as an example. In the early stages of his venture, when substantial R&D expenses led to a cash crunch, Wang deliberately slowed down the pace of research and development. Instead, he chose to first bring existing products to fruition and generate revenue before embarking on new product development. This strategic shift “saved” BeiGene, which was then in dire straits.

Let us further discuss embracing team diversity. Out of self-protection, scientists always keep patents firmly in their own hands, and as a result, they reject some “partners” with commercial attributes; however, in reality, “Scientist + Professional Manager” partnership model offers significant advantages; on one hand, it compensates for each party’s weaknesses, and on the other, it maximizes their respective strengths.

Take Shi Yigong as an example; his partner, Cui Jisong, is a seasoned professional manager. Prior to joining InnoCare Pharma, Mr. Cui had accumulated over 20 years of experience in R&D and corporate management within the pharmaceutical industry, having previously served as CEO and Chief Scientific Officer at BioDuro. His business acumen and managerial expertise have undoubtedly provided significant support to InnoCare Pharma.

Next is “Adhering to R&D”.

A senior investor once told VCBeat’s Orange Bureau that the capital market highly recognizes hard-tech innovation. As long as technological and product advancement is ensured, coupled with substantial market potential and room for imagination, a one- to two-year delay in reaching the break-even point due to new R&D investments is not necessarily a negative outcome.After all, entrepreneurship is a future-oriented endeavor.

Top scientist-founders recognized this early on. Take Shi Yigong as an example: when InnoCare Pharma filed its prospectus in 2019, its annual R&D expenditure had reached RMB 150 million. This investment proved worthwhile, as within less than four years of its establishment, InnoCare’s R&D team developed nine candidate drugs with the potential to become “Best-in-Class” and “First-in-Class” therapies.

Another example is Wang Xiaodong, who has assembled a core team of over 400 researchers from major global pharmaceutical companies and prestigious academic institutions, as well as a clinical development team of more than 1,200 individuals, focusing on the cutting edge of global biopharmaceutical technology.

Furthermore, regarding expenditures, data show that in 2019, BeiGene’s R&D expense ratio was 223.03%, approximately 2.5 times higher than the industry average of 88.89%. In the first three quarters of 2020, BeiGene’s R&D expense ratio reached 452.66%, roughly 6.6 times higher than the industry average of 68.7%.

Next is “Resource Linking.”

For scientists, in addition to excelling in their core competency—namely, focusing on product research and development—it is also essential to leverage external resources by establishing precise connections with investment institutions.

Taking GuiChuangTongQiao as an example, prior to its initial public offering,Zhuangchuang Tongqiao has completed a total of eight rounds of financing,These include multiple VC/PE firms and strategic investors such as Honghui Capital, OrbiMed, FountainVest Partners, and SDIC Innovation. During the IPO phase, Zhenjiang Tongqiao introduced 12 cornerstone investors, including Hillhouse, Fidelity International, ClearPool Capital, Boyu Capital, AIHC, Hudson Bay, and Xuehu Capital, thereby bolstering its successful listing.

In an interview with VCBeat’s Orange Bureau, a successful entrepreneur stated that when scientists select investment firms, they should not focus solely on financial capital or the firm’s prestige. Instead, they should make targeted choices based on the company’s current stage of development. For instance, in the early stages, it is advisable to choose investment firms with which they are relatively familiar, while in the mid-to-late stages, they may opt for industrial investment institutions.

Finally, “Believe in the Team.”

Just as scientific research requires teamwork, so does entrepreneurship; it necessarily involves division of labor and collaboration, with each member leveraging their respective strengths.

From this perspective, scientists cannot simply go it alone and handle every task personally; instead, they should embrace a philosophy of absolute trust, delegating specialized tasks to those with greater expertise.Recognize the importance of teamwork and have full confidence in your team.

Take BeiGene as an example. In addition to being a founder, Wang Xiaodong serves as the Chairman of the company’s Scientific Advisory Committee, meaning he is primarily responsible for product research and development. Meanwhile, John Oyler, as a co-founder, also holds the positions of Executive Director, Chairman of the Board, and Chief Executive Officer, overseeing the company’s overall operations. The pairing of a scientist who is an academician of both the Chinese Academy of Sciences and the US National Academy of Sciences with a manager well-versed in working with scientists represents an ideal combination for launching a pharmaceutical enterprise.

Driven by the dual forces of favorable policies and market conditions, the healthcare sector is currently entering “The Era of Scientist-Led Entrepreneurship”, an increasing number of scientists are stepping out of the laboratory and venturing into the entrepreneurial arena.

But as with scientific research, it is not “quantity” but “quality” that matters, because only frontier technologies that are genuinely original and meet clinical needs can truly “emerge” from the laboratory, achieve real-world implementation, and gain market “recognition.”

This is only one aspect; other factors, such as whether scientists possess interdisciplinary competencies, are also crucial.

Therefore, scientists who are on the entrepreneurial path or preparing to embark on it should“Deconstructing the Market” while “Reinventing Ourselves.”